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Re: Re-use revisited

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Thinking about it, it seems odd that professional liability insurance is based upon revenue, not cost of construction (at least mine is.)  In that regard, the architect isn't wrong in saying that the liability assumed by being responsible for additional units won't affect the engineer's bottom line.  There could be 10 units or 1000; if the fee is $1500 total, it is the insurance carrier that gets stuck even though they don't know it.  I would love to be able to tell a client that I have to charge a minimum of x% of construction cost because my insurance goes up proportionally.  - Not that I want my insurance to go up...
FWIW, I entered a contract with a client recently where their work was valued at about $10,000,000 (it was essentially single trade and all directly related to my design.)  Since the design time was very limited, I set a base fee of a few $1000 with construction consultation of up to about 100 hours on top of that.  ( I wonder what my insurance agent would have to say about that...)
Since the job was very repetitive - the same exterior cladding pattern everywhere - and there were two identical buildings, it could be argued that it was re-use.  Does it matter if it is 20 identical houses or 2 identical buildings or the same 3 connections used thousands of times on one project?  This is a great debate that we could all benefit from if some industry guidelines could ultimately be established.
Mark - I don't know what the 10% figure amounts to, but if you are taking full liablity for these homes and there was a full design for the original, then you should be in for a couple hundred per additional house for re-use.  But if you designed one ridge beam and they plan to re-use the same beam in every house, then that would be a harder matter to argue extra fees per house.  But I'm just shooting from the hip with my gut feeling.  I haven't really been down that road before.
Jim Wilson, PE
Stroudsburg, PA 

>>> Mark Pemberton 07/30/04 03:51PM >>>
I had brought up this topic a couple of months ago and after consideration of the responses I received I decided to include a 10% re-use fee for the project in question. With up to 200 identical structures within this subdivision, I felt this was a fair amount to cover liability and the extra calls I'll probably get with that many units. The contract was signed by the architect, however the architect is now saying the word "re-use" only applies to additional units beyond the subdivision site. They also claim that it is typical for architects and engineers to just be paid for each different structure and that insurance should cover the additional liability involved. We are now in the process of possibly re-negotiating the contact. I can't believe there are engineers (or even architects) who would set a fee for a structure regardless of how many times it's built. I'm staying way away from sub-divisions if that's the case. Any thoughts?

Mark Pemberton, S.E.
Pemberton Engineering
Davis, CA

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